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Commonwealth Bank of Australia (ASX: CBA) shares outperformed the S&P/ASX 200 Index (ASX: XJO) over the March quarter, while underperforming two of the three other big banks.

From the opening bell on 4 January through to the closing bell on 31 March, CBA shares gained 3.2%. That compares to a loss of 1.2% posted by the ASX 200 over that same period.

CommBank shareholders also saw a better return than those holding Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares. The ANZ share place finished the quarter down 1.4%.

However, the other two big banks performed far more strongly.

The National Australia Bank Ltd (ASX: NAB) share price gained 10.0% during Q1 while the Westpac Banking Corp (ASX: WBC) share price led the charge, gaining 11.9%.

What moved CBA shares during the quarter?

By far the biggest day for CBA shares in the quarter just past was 9 February, a day that saw the bank close up 5.6%.

That’s the day the bank released a stellar set of figures for its half year financial results.

Highlights included a 23% increase in cash profit after tax, which came in just over $4.7 billion for the six-month period. This was achieved alongside a slight (0.1%) reduction in operating costs.

The strong performance saw CBA boost its interim dividend by 17% from the prior corresponding period, to $1.75 per share. (Note, at the current price, CBA shares pay a 3.6% trailing dividend yield, fully franked.)

But perhaps the biggest news of the day was the bank’s announcement of a $2 billion on-market share buyback. This followed a $6 billion off-market share buyback in 2021.

Commenting on the strong results at the time, CommBank’s CEO, Matt Comyn said, “Higher cash profits were a result of continued volume growth across the business in home lending, business lending and deposits, flat operating costs and significantly lower loan impairment expense due to the improving economic outlook.”

During the quarter, CBA also continued to progress with the rollout of its Australia first crypto service. However, the official launch continues to face regulatory delays.

How has the CommBank share price performed longer term?

As long-term investors it’s good to take a step back to see the bigger picture. And that bigger picture looks quite good for CBA shares.

Over the past 5 years the CBA share price is up 23.1%.

As for its big three rivals, the ANZ share price is down 13.6%; the NAB share price is down 1.8%; and Westpac shares have lost 28.8% over the 5 years.

The post Here’s how CBA shares stacked up over the March quarter appeared first on The Motley Fool Australia.

More reading

• Is the NAB share price entering a ‘sweet spot’?
• How retirees can maximise returns from ASX dividend shares: fund manager
• Here are the 5 best performing ASX 200 bank shares of the March quarter
• Own CBA shares? Here’s why the bank’s crypto rollout is facing delays
• Why CBA, Kelsian, PolyNovo, and Weebit Nano shares are pushing higher

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BlueScope Steel Limited (ASX: BSL) share price is trading higher on Monday morning after the company announced a binding agreement to buy the second-largest metal painter in the US.

The US$500 million ($671 million) acquisition of the Coil Coatings business from Cornerstone Building Brands, Inc (NYSE:CNR) will allow BlueScope to supply another 900,000 tonnes of paint a year to that market.

The BlueScope share price is 1.76% higher to $20.84 in early trade as the company hosts a webcast to sell the merits of the takeover. In comparison, the S&P/ASX 200 Index (ASX: XJO) is trading 0.57% higher at the time of writing.

BlueScope’s acquisition hits a “sweet spot”

BlueScope’s managing director Mark Vassella said this transaction hits the group’s “sweet spot”:

The acquisition of Coil Coatings is a significant step forward in our growth plans for North America.

It almost triples our US metallic coating and painting capacity to over 1.3 million metric tonnes per annum, from around 475,000 tonnes per annum at present, and gives us immediate and direct access to the large and growing Eastern US region.

BlueScope believes that Coil Coatings complements its existing businesses in North America. It is also consistent with its previously-flagged strategy of expanding painting operations into the eastern US region via a greenfield paint line.

How much BlueScope is paying for Coil Coatings

Further, the group believes the acquisition will generate cost savings of around US$12 million annually by year three.

While the amount may sound modest, Vassella pointed out the focus is the medium to longer-term opportunity the acquisition provides.

The price tag on Coil Coatings represents around 8.9 times CY21 pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) of $56 million.

However, the multiple is technically higher as BlueScope’s calculations include the year-three synergies.

Post the takeover, Cornerstone Building will remain a key customer of the business.

Acquisition takes BlueScope’s investment to $4.5bn

BlueScope will fund the acquisition from its cash holdings and said the deal will be immediately earnings per share (EPS) accretive. If all goes to plan, the transaction will be completed in calendar year 2022.

The group has been aggressively expanding into the North American market. Following the takeover of Coil Coatings, it will have invested over $4.5 billion in the region.

The BlueScope share price has been largely flat over the past 12 months, gaining around 2%. Over the same time, the ASX 200 has gained 7.5%.

The post BlueScope (ASX:BSL) share price jumps on $671m acquisition news appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau owns BlueScope Steel Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IGO Ltd (ASX: IGO) share price is on form on Monday morning.

At the time of writing, the battery materials producer’s shares are up over 4% to $14.28.

Why is the IGO share price charging higher?

Last week the battery materials miner’s proposed takeover of nickel producer Western Areas Ltd (ASX: WSA) collapsed after the independent expert ruled that the proposal was not in the best interests of the latter’s shareholders.

This morning, IGO decided to up the ante and return with a better offer which it believes will be acceptable to the independent expert.

According to the release, IGO has agreed to increase its offer to $3.87 cash per share, which is 15.2% higher than its previous proposal of $3.36 per share.

Positively, the amended proposal has been unanimously recommended by the Western Areas board. This is in the absence of a superior proposal and subject to the independent expert concluding that it is in the best interests of shareholders.

Also supporting the proposal is Wyloo. It will vote all the shares it owns through its 9.8% stake in favour of the deal pending the same conditions above.

Management commentary

Western Areas’ Chairman, Ian Macliver, was pleased with the new proposal.

He said: “The Western Areas Board is pleased to have negotiated an agreement with IGO considering the recent volatility in the nickel price and the positive impact this has had on Western Areas cashflow position and fundamental asset value since the Initial Scheme was announced on 16 December 2021. Forrestania is capturing the upside in near and medium term nickel prices, while Odysseus is positioned to capitalise on the longer-term nickel price driven by growth in electric vehicles.”

IGO’s Managing Director and CEO, Peter Bradford, believes that the higher takeover proposal will still create value for the company and its shareholders.

He commented: “The Revised Scheme Consideration shares value with WSA shareholders, while maintaining a very strong value proposition for IGO shareholders over the longer term. IGO looks forward to building WSA shareholder support for the transaction, while in parallel continuing the important integration workstreams that have already commenced, as we work toward transaction completion.”

Mr Bradford highlights that the acquisition is aligned with IGO’s strategy focused on metals critical to clean energy and is expected to free cash flow accretive from FY 2024 once the ramp up of the Odysseus underground mine development is complete.

The post IGO share price charges higher after lifting its Western Areas takeover offer appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The National Australia Bank Ltd (ASX: NAB) share price and those of its banking peers have held up well, but the best may be yet to come, according to a top broker.

ASX bank shares have outperformed recently even as the S&P/ASX 200 Index (ASX: XJO) struggled against the threat of rising rates, yield inversion and geopolitical conflict.

The interesting thing is that the risk of higher interest rates roiling markets may actually be a blessing to banks.

NAB share price and other ASX banks on an upgrade cycle

That’s the view of Citigroup, which upgraded its position on the bank sector to ‘positive’ with earnings changes of more than 10% for FY24. The broker said:

This tightening cycle is set to reshape the sector’s earnings profile over the next 2½ years.

NIMs [net interest margins] are expected to return to pre-pandemic levels, materially above consensus. Asset quality is a natural concern, but we see a ‘sweet spot’.

Default risk not as big a threat

There are a few reasons why the broker isn’t worried about asset quality – or the risk of loan defaults as rates rise. It noted that most mortgages were written post the Hayne Royal Commission and that banks have used higher rates to stress-test applicants before approving loans.

Further, many borrowers have a large equity buffer due to surging residential house prices.  Citi also pointed out that the ratio of interest payments as a percentage of household disposable income is at a record low of just 5.2%.

If bad debts remain benign and bank profit margins expand thanks to higher rates, the broker thinks sector could enjoy a re-rate.

Good news not priced into NAB share price or other big banks

Citi thinks the market has not woken up to this fact. If the broker is right, we could see ASX banks, including NAB, continue to outperform.

The NAB share price has jumped more than 10% since the start of calendar 2022 and is not far off a four-year high.

The Westpac Banking Corp (ASX: WBC) share price is another outperformer. It’s rallied more than 11% over the period.

The Commonwealth Bank of Australia (ASX: CBA) share price delivered a more modest 3% increase. But Australia and New Zealand Banking Group Ltd (ASX: ANZ) is the outlier as it dipped by nearly 2%.

Which ASX bank should you buy?

If you wonder which of the ASX big four banks is best placed to deliver solid returns, Citi favours the ‘cheaper’ majors.

These are the Westpac share price and ANZ Bank share price. The broker is recommending both as “buy”.

Meanwhile, it has a “neutral” rating on the NAB share price and a “sell” on the CBA share price.

The post Is the NAB share price entering a ‘sweet spot’? appeared first on The Motley Fool Australia.

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• Here are the 5 best performing ASX 200 bank shares of the March quarter
• Who owns ANZ shares? Take a look. You might be surprised

Motley Fool contributor Brendon Lau owns Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are plenty of ASX shares focused purely on the domestic economy.

Names like Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS) earn most of their profit from Australia.

But some businesses make a significant amount overseas and plan to bring in even more earnings from international sources.

Here are two ASX shares with global growth intentions.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a retailer of affordable jewellery, mainly targeted at a younger audience.

It is liked by multiple brokers, including Macquarie, which rates it as a buy with a price target of $24.90. That implies a potential rise in the Lovisa share price of almost 40% over the next year.

The broker noted the growth of store numbers, sales and margins, with ongoing growth in the second half of the 2022 financial year.

In the first half, the ASX share opened 42 new stores, amounting to 586 at the end of the period. Total revenue rose 48.3% to $217.8 million, while the gross profit increased 50.5% to $170.7 million. Net profit after tax (NPAT) increased 70.3% to $36.7 million.

The ASX growth share has more than 20 stores in Australia, New Zealand, Malaysia, South Africa, the United Kingdom, France, Germany, the United States, and the Middle East. It entered two new markets during the period – Cyprus and Lebanon.

The US is already its second-largest store network. It opened 18 new stores in the US during the period, now trading across 19 states.

In the first eight weeks of the second half of FY22, total sales were up 61.7% year on year.

Despite that, the Lovisa share price is down 10% since the start of the year.

On Macquarie’s numbers, the Lovisa share price is valued at around 30x FY23’s estimated earnings.

City Chic Collective Ltd (ASX: CCX)

City Chic is a leading retailer of plus-size clothing, footwear and accessories for women.

In Australia, it has a national network of City Chic stores. But, it also has several other brands in different markets. For example, in the US, it operates the Avenue website. In the UK, it operates the Evans website. Also in the northern hemisphere, it has a number of partnerships where its products are sold through other retailers.

The City Chic share price has been smashed in 2022, down around 40% since the start of the year.

Many brokers rate this ASX growth share as a buy, including Ord Minnett. The price target from this broker is $5.20, a potential rise of around 60% over the next year if the broker ends up being right.

The broker noted the high level of sales growth in the first six months of FY22, despite the impacts caused by COVID-19, including lost store trading doors and other factors.

In HY22, sales revenue rose by 49.8% to $178.3 million. Despite all of the negative impacts in this result, and the $10 million of COVID-related “austerity measures” in the prior period, it increased underlying earnings before interest, tax, depreciation and amortisation (EBITDA) by 1% to $23.5 million.

At the start of the second half of FY22, the ASX share continued to deliver revenue growth. It reported momentum building in the US, UK and Europe. City Chic said that it’s also developing new programs, launching new ranges with existing partners, and onboarding new partnerships.

According to Ord Minnett, the City Chic share price is valued at 19x FY23’s estimated earnings.

The post 2 ASX shares with impressive global growth plans: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Lovisa Holdings Ltd and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Dogecoin (CRYPTO: DOGE) is making big gains in today’s trading. The popular, meme-themed cryptocurrency was up roughly 7.2% over the previous 24-hour period as of 12:15 p.m. ET Sunday.

Tesla CEO Elon Musk purchased a 9.2% stake in Twitter recently, making him the social media company’s largest shareholder and resulting in him joining the company’s board soon after. Yesterday, Musk made comments stating that he believed that users should be able to pay for the Twitter Blue premium subscription service with Dogecoin, and his comments have prompted big gains in the token’s price. 

So what

Dogecoin has been making gains lately despite bearish pressures impacting the broader crypto space. It’s one of the very few top-100 tokens to be in the green over the last week, and investors in the popular meme token can once again thank Tesla’s Elon Musk for the pricing gains. 

Musk has been one of the most high-profile champions of the cryptocurrency, and the influential tech figure has said that it’s one of only three cryptocurrencies he owns — along with Bitcoin and Ethereum. 

Now what

Outside of pure speculation and market momentum, increased user adoption and payment use cases are one of the main factors that could work to drive the price of Dogecoin higher. However, there are still some reasons to be skeptical of whether Dogecoin and other cryptocurrencies actually make much sense to use as currencies. Volatility in the crypto space has opened the door for explosive gains and made some investors very rich, but the tendency for big token pricing swings comes with problems.

For example, if a user thought that the price of Dogecoin was going to go up even moderately from its price at a given time, they probably wouldn’t have much reason to use it to purchase Twitter Blue. Alternatively, companies that accept Dogecoin and other volatile cryptocurrencies as payment are effectively gambling that the price will increase, rather than decrease substantially. 

The fact that Dogecoin has a questionable utility as a currency doesn’t necessarily mean that its token price won’t climb significantly above current levels, but there’s still uncertainty about whether businesses accepting it as payments will prove to be a bullish catalyst. Investors should understand that the token remains a high-risk, high-reward play. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Dogecoin is soaring today appeared first on The Motley Fool Australia.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin, Ethereum, Tesla, and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Bapcor Ltd (ASX: BAP) share price could be a winning idea in the S&P/ASX 200 Index (ASX: XJO).

For readers who don’t know what Bapcor is, let’s look at some of its businesses.

Bapcor’s operations

This business describes itself as Asia Pacific’s leading provider of vehicle parts, accessories, equipment, service, and solutions.

It has businesses providing auto parts and services in several areas in the vehicle sector. ‘Trade’ businesses include Burson Auto Parts, Precision Automotive Equipment, and BNT (NZ).

Next, it has a specialist wholesale segment covering a wide array of businesses including AAD, Bearing Wholesalers, Baxters, Diesel Distributors, and Federal Batteries. The ASX 200 share also has commercial truck parts – Truckline for heavy vehicles and WANO for light vehicles.

Additionally, it has a retail segment. This includes Autobarn and Autopro. Service businesses include Midas, ABS, Shock Shop, and Battery Town.

Here are three reasons why the Bapcor share price could be attractive:

Network growth

Bapcor has a footprint of around 1,100 locations across Australia and New Zealand in trade, specialist wholesale, and retail.

The ASX 200 share has a five-year target to grow its footprint to over 1,500. That implies an increase in the scale of the business of well over 30%.

When combined with potential long-term same-store sales growth, that could allow revenue to keep growing over the coming years. This could be supportive of the Bapcor share price.

It’s not just Australia and New Zealand that the business has its eyes on.

Bapcor is also growing in Asia. It has eight operating Burson locations in the Bangkok district. It opened its first store outside of Bangkok at Sirachi in October. The company says this new store is “performing well”.

Bapcor Thailand’s FY22 second-quarter sales were 85% higher than the first quarter.

The ASX 200 share also has a 25% stake in Tye Soon, with 60 locations in Asia, predominately in South Korea and Malaysia. It also has wholesale distribution businesses in Hong Kong, Singapore, and Indonesia.

Higher profit margins

Bapcor is looking to become more efficient and profitable. Increased scale alone can help with operating leverage.

But its new consolidated distribution centre in Tullamarine could lift the company’s productivity significantly. It’s targeting operating expenditure savings of around $10 million and an inventory improvement of $8 million. Most of these savings come from consolidating its three largest warehouses into the new distribution centre.

The company is also looking to supplement market-leading brands with Bapcor’s own-brand products.

Over the next five years, Bapcor wants to grow its market penetration of own-brand products from 29.8% now to 40% in five years and, in New Zealand, from 30.3% to 45%. It’s also aiming for greater own-brand penetration in the specialist wholesale division from 54.6% to 65% and in retail from 33.9% to 45%. Own-brand sales can come with higher margins.

Valuation and dividends

Investors may also consider the Bapcor share price and its dividend as a reason to like the business.

According to Commsec, Bapcor shares are valued at 16x FY22’s estimated earnings with a projected FY22 grossed-up dividend yield of 4.8%.

The post 3 reasons the Bapcor share price could be an ASX 200 winner appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Bapcor. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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S&P/ASX 200 Index (ASX: XJO) shares could be a good hunting ground for businesses that look good value.

Experts have named two ASX shares as buys with plenty of capital growth potential.

Both of these ASX 200 shares could be opportunities in 2022 and beyond:

Pinnacle Investment Management Group Ltd (ASX: PNI)

Running a funds management business requires many different tasks to be completed. Australia’s leading stock pickers may prefer just to focus on the investing side of things of funds management.

Pinnacle partners with fund managers and provides many of the ‘back end’ services such as distribution and client services, fund administration, compliance, finance, legal, technology and other business infrastructure.

There are several asset managers in the portfolio, including Plato, Hyperion, Solaris, Antipodes, Spheria, Firetail, Metrics, Coolabah Capital and Five V.

The Pinnacle share price has fallen by 38% since the start of 2022.

It’s currently rated as a buy by multiple brokers, including Morgans. This broker has a price target of $13.25 on the business. That implies a possible rise of the Pinnacle share price of more than 30% over the next 12 months.

While Morgans recognises the short-term problems volatility can cause, it thinks it’s a good long-term idea.

Morgans thinks that the ASX 200 share is valued at 24x FY22’s estimated earnings.

TPG Telecom Ltd (ASX: TPG)

TPG is a telecommunications business operating through several brands, including Vodafone, iiNet, TPG, Internode, Lebara and AAPT.

It’s currently rated as a buy by a few brokers, including Macquarie. That broker has a price target on the business of $8.20, implying a potential upside of just over 30% over the next year.

Macquarie thinks that the ASX 200 telco share can grow its market share in ‘enterprise’ and benefit from higher margins from a rise in fixed wireless connections.

TPG also recently announced a deal with Telstra Corporation Ltd (ASX: TLS) that will give TPG more access to regional customers while giving Telstra access to some of its spectrum.

This move could avoid future capital expenditure and operating costs associated with TPG Telecom regional sites being decommissioned, prevent future costs that would have been needed to grow into regional Australia, and mean TPG receives spectrum payments from Telstra.

TPG said that it ended FY21 with growing subscriber momentum. Its mobile division saw net mobile subscriber additions of 33,000 in the three months to the end of January 2022 as restrictions subsided. It also said that its post-paid mobile average revenue per user (ARPU) is starting to lift with roaming returning.

Management said that a “robust financial position” enabled the business to grow its final dividend by 13.3% to 8.5 cents per share. This compared to the 8 cents per share FY21 interim dividend and the 7.5 cents per share FY20 final dividend from the ASX 200 share.

On Macquarie’s numbers for FY23, the TPG share price is valued at 27x FY23’s estimated earnings with a projected grossed-up dividend yield of 5.25%.

The post Experts say it’s time to buy these 2 ASX 200 shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended PINNACLE FPO. The Motley Fool Australia owns and has recommended PINNACLE FPO and Telstra Corporation Limited. The Motley Fool Australia has recommended Macquarie Group Limited and TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Brokers evaluate many different ASX shares to consider whether they are an opportunity. Some ASX dividend shares are being rated as buys right now.

The below businesses currently have buy ratings and also are expected to pay noteworthy dividends:

Nine Entertainment Co Holdings Ltd (ASX: NEC)

Nine is one of the largest media businesses in Australia. It owns the Nine TV network, newspapers including the Sydney Morning Herald, The Age, and the Australian Financial Review, as well as streaming service Stan, and various other media. Nine also owns a significant portion of Domain Holdings Australia Ltd (ASX: DHG).

The ASX dividend share is currently rated as a buy by at least four brokers, including UBS. The broker thinks that when considering the Domain shareholding, which accounts for just over a quarter of Nine’s value, the rest of the Nine business looks good value. The price target is $3.90.

Ord Minnett is another broker that likes Nine, with a buy rating and a price target of $3.65. This broker has estimated a grossed-up dividend yield of 5.9% in FY22.

In the FY22 half-year result, Nine reported revenue growth of 15% to $1.33 billion and net profit after tax (NPAT) growth of 20% to $225 million. It grew its interim dividend by 40% to 7 cents per share. That dividend alone represented a grossed-up dividend yield of 3.4% at the current Nine Entertainment share price.

On UBS’s numbers, the Nine Entertainment share price is valued at 15x FY22’s estimated earnings.

Metcash Limited (ASX: MTS)

Metcash is a diversified hardware business and wholesale supplier. It supplies IGA supermarkets across the country. Metcash also supplies various liquor retailers including Cellarbrations, The Bottle-O, IGA Liquor, Duncans, and Thirsty Camel. Finally, there are three businesses in its hardware division – Mitre 10, Home Timber & Hardware, and Total Tools.

The ASX dividend share is currently rated as a buy by the broker UBS. It acknowledges that the business has invested in its operations. Further, a highlight for the broker is the hardware division which is growing profit quickly.

UBS thinks that Metcash is going to pay a grossed-up dividend yield of 5.7% in FY22 and 6% in FY23.

Metcash has a target dividend payout ratio of around 70% of underlying net profit after tax. It grew its FY22 interim dividend by 31% to 10.5 cents per share. The ASX dividend share says that it has a strong focus on shareholder returns.

In Metcash’s HY22 report, it saw 13.1% growth of underlying NPAT to $146.6 million, with 13.9% earnings before interest and tax (EBIT), growth to $231.2 million. Hardware EBIT surged 53.3% to $98.9 million.

The company continues to invest in its supply chain and digital operations to help grow the business.

According to UBS, the current Metcash share price is valued at 16x FY22’s estimated earnings.

The post 2 quality ASX dividend shares that brokers love appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Pilbara Minerals Ltd (ASX: PLS) share price has started the week in a positive fashion.

In early trade, the lithium giant’s shares are up 2.5% to $3.28.

Why is the Pilbara Minerals share price pushing higher?

Investors have been bidding the Pilbara Minerals share price higher today following an update on the company’s downstream lithium chemicals conversion facility joint venture (JV) with Korea’s Posco.

According to the release, the key conditions precedent and other completion criteria for the formation of the JV between Posco and Pilbara Minerals are now satisfied. These included the provision of an acceptable construction and ramp up budget for the conversion facility and the filing of necessary regulatory approvals.

In respect to the budget, the capital development costs for the conversion facility are estimated at USD$670 million to US$720 million (excluding any contingency allowance). Though, after allowing for initial working capital and pre-production financing costs, the total funding requirement for the JV is now expected to be approximately US$750 million to US$800 million. This is US$50 million greater than previous estimates.

Pilbara Minerals will fund its initial 18% stake in the JV through its A$79.6 million five-year convertible bond being provided by Posco. Funds will be drawn down under the convertible bond upon formation of the JV and completion of other closing conditions, which are expected to be satisfied later this month.

What next?

Major construction works for the South Korea-based conversion facility are expected to commence from the June 2022 quarter, with detailed engineering and early works already underway. Construction of the first train of the conversion facility is expected to be completed by mid-2023, with the second train to be completed approximately three months later.

Once complete, the conversion facility is expected to play integral role in Posco’s supply chain and business strategy as it becomes a major battery materials supplier to global markets.

Pilbara Minerals’ Managing Director and CEO, Ken Brinsden, said: “Pilbara Mineral’s longstanding relationship with POSCO continues to go from strength-to-strength, and we are pleased to partner with them to grow lithium chemicals production to support the massive demand growth that is building around the globe.”

“With commissioning expected late 2023, this joint venture places both Pilbara Minerals and POSCO in a very strong position to participate as one of the few near-term lithium fine chemicals producers with underwritten raw materials supply that will emerge in the coming two years. It’s exciting for both the team at Pilbara and our shareholders to be able to extend our reach in the industry beyond spodumene and merchant markets.”

The post Pilbara Minerals share price higher on lithium conversion facility update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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